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Employer Group: Wage Bill Needs Scrutiny

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Members of Congress should take enough time to make sure they understand what H.R. 2831, the Lilly Ledbetter Fair Pay Act, really would do.

The American Benefits Council, Washington, has issued that plea in a letter to Congress.

Members of the House Education and Labor Committee recently voted 27-20 to approve H.R. 2831.

The bill is supposed to counteract the effects of a May 29th U.S. Supreme Court decision that appears to reduce the amount of time that employees have to file wage discrimination suits under the Civil Rights Act.

The bill would treat the issuance of each paycheck to be a separate discriminatory act if the paycheck is less than it otherwise would have been due to the employee’s sex, race, color, religion or national origin, according to Debra Friedman, a lawyer in the Philadelphia office of Cozen & O’Connor.

The bill would give employees the ability to file a pay discrimination claim many years after a discriminatory pay decision was made, Friedman says.

“The legislation essentially eliminates the statute of limitations for pay discrimination claims in many circumstances,” Friedman writes.

The American Benefits Council letter neither supports nor opposes H.R. 2831.

But, if an employee makes allegations about discrimination that occurred 30 years earlier, the defendant company “may have no effective way to defend the case, which hardly seems fair,” James Klein, president of the council, writes in the letter about the bill.

“Our question is: how would a judgment in favor of the plaintiff affect the company’s retirement plan?” Klein asks. “If the company maintains a defined benefit plan that calculates benefits based on an employee’s final average pay, would the plan need to recalculate the plaintiff’s benefit based on the revised pay, which could be substantially higher? What if the lawsuit is a class action, so that large numbers of plan participants could be making the same claim for much higher benefits?”

Successful class actions could cause pension plans to become “woefully underfunded,” Klein writes.

In some cases, a plan participant might ask for a pension benefit increased based on a plan benefit formula that had not been in effect for years, Klein writes.

“The burdens of recreating both old data and old benefit formulas in order to recalculate that individual’s benefits would be immense, yet would arguably be required by the legislation,” Klein writes.


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